Congress recently passed a $1.9 trillion stimulus package with a narrow Democratic majority in the Senate. It has now been made official with President Biden signing the bill into law on Thursday.
The bill provides federal funding for stimulus checks and other programs to support the economy as America recovers from the Coronavirus Pandemic. Here are the most important aspects of the law, and an update on how it has affected the stock market.
What’s in the Stimulus Package?
Stimulus checks have been the most widely publicized aspect of the package. Households will receive direct payments from the federal government. Eligible families will receive up to $1,400. Funding was also included for child tax credits, which lawmakers hope will limit the number of American children who are raised in poverty.
In addition, the bill also allows for a tax deduction for individuals who received jobless benefits in 2020. The first $10,200 received in federal jobless benefits will be exempt from income tax if an individual earned less than $150,000 in the 2020 tax year.
Tribal, State, and Local government units have been allocated $350 billion in federal aid to support struggling economies. Small businesses have also been targeted with the stimulus. Around $7.25 billion will be allocated to the Paycheck Protection Program for small businesses.
Funding was included for Coronavirus vaccinations, managing the pandemic, and tracking new strains of the virus.
Stimulus Brings New Confidence to the Stock Market
The stimulus package is one of the biggest ever passed by any government. With the American economy already showing signs of recovery, investors are confident that this will provide an additional boost to speed things along.
The passing of the law seemed doubtful just days ago as Republican lawmakers said it was too expensive and contained too many elements that weren’t directly related to the Coronavirus Pandemic.
Stocks recovered sharply on Wednesday when lawmakers approved the bill, and indexes were up again on Thursday after Biden signed it into law, a day earlier than expected.
Both the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) hit new highs on Thursday at the close of trading. They were up 0.58% and 1.04% respectively. The NASDAQ (COMP), which lagged the other exchanges on Wednesday, had a better session on Thursday, jumping by 2.52%.
This news will likely extend the market rally and give confidence to bulls who believe that consumer spending will steadily expand the economy in the months to come.
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